What is a retainer pricing model, and which one is your agency running?

A retainer is a promise about what the fee buys

A retainer pricing model charges a client the same fee every month for work that carries on. The client gets a predictable bill. You get predictable income and a team you can plan around.

The fee is the easy part to agree. The hard part is what it buys, because that decides who pays when the month takes more work than planned. Many retainers never say.

Three retainers that can charge the same fee

• An hours retainer buys a set number of hours. Work beyond them is billed at an agreed rate, so the client pays for every overrun.
• A deliverables retainer buys a fixed list of outputs. A new item can be quoted, but extra revisions inside the list are yours to absorb.
• An access retainer buys your team's time as needed. Nothing in it lets you charge for a busy month, so every overrun comes out of your margin.

Each fee rests on a number of hours, whether or not the contract names it. You can work that number out.

Hours the fee can carry = fee x (1 - the margin you need) / cost per hour

One retainer in a month that ran over

Run the numbers on a $6,000 monthly retainer. An hour costs you $60 and you need a 40% margin, so the fee carries 60 hours. This month the account took 75.

These figures describe an invented retainer chosen to show the arithmetic. They are not a client result.

Under the access model you keep $1,500 instead of the $2,400 you planned. A year of months like this costs $10,800 on one account, and no invoice ever shows it.

Hours retainers carry a risk of their own. If unused hours roll over, they are work you still owe, and a quiet month only moves the cost to a later one.

How to find out which model you are running

1. ( 01 )

   Read what the contract says the fee buys

   Hours, a list of outputs, or nothing specific. If it says nothing, you are running an access retainer, whatever you call it.

2. ( 02 )

   Work out the hours the fee can carry

   Multiply the fee by one minus the margin you need, then divide by what an hour costs you.

3. ( 03 )

   Count the hours the account really took

   Take the last three months of timesheets, including calls, revisions and reporting. Average them.

4. ( 04 )

   Find who paid for the difference

   If the account took more hours than the fee carries, check whether any of them reached an invoice. The rest came out of your margin.

5. ( 05 )

   Check for hours you still owe

   If unused hours roll over, add them up. Multiply by your cost per hour to see what that promise is worth.

What to do with the answer

If an access retainer regularly runs past the hours its fee carries, move it at renewal. Name the hours or the deliverables, and agree a rate for what falls outside.

If a deliverables retainer leaks through revisions, put a revision limit in the list. That turns hours you absorb into hours you can quote.

Then track one number each month: hours worked against the hours the fee can carry. While it stays at or below them, the retainer is holding the margin you priced it on.